Stocks slip, dollar gains as China cuts growth target

NEW YORK (Reuters) - A gauge of world stock markets recovered from early declines but was slightly lower on Tuesday as China cut its growth targets to a 30-year low but added more stimulus, while strong U.S. economic data sent the dollar to a two-week high.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 4, 2019. REUTERS/Brendan McDermid

Stocks on Wall Street traded in a like fashion, with the benchmark S&P 500 a touch below the unchanged mark as investors looked for developments on trade between the United States and China. Positive retail earnings from Target Corp and data on the U.S. services and housing sectors helped provide support to the upside.

The Commerce Department said sales of new U.S. single-family homes rose to a seven-month high in December while a reading from the Institute for Supply Management showed an acceleration in growth in the vast services sector in February.

The S&P 500 index has struggled to hold above the 2,800 level, which has proven to be a stiff resistant point. Still, the index is up nearly 19 percent from its Dec. 24 low.

“When you are here at that important level in the S&P 500, it’s healthier to see the market slow down, pause, take account of the micro and the macro and absorb the good news,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“To see the market pause right now, as opposed to a deep sell-off, is encouraging.”

European shares bounced between modest gains and declines, eventually closing slightly higher in the wake of China’s response to the lowered growth target of between 6.0 to 6.5 percent for 2019, which includes billions of dollars in planned tax cuts and infrastructure spending and a lack of news on the trade front.

The Dow Jones Industrial Average fell 13.02 points, or 0.05 percent, to 25,806.63, the S&P 500 lost 3.16 points, or 0.11 percent, to 2,789.65 and the Nasdaq Composite dropped 1.21 points, or 0.02 percent, to 7,576.36.

Fatigue after a strong run higher for equities is playing a role in the recent pause. MSCI’s All Country World Index was down 0.07 percent, and has now risen more than 15 percent from its near two-year closing low on Dec. 24. The index is trading at 14.6 times expected earnings, on par with levels back in early October, when a global bear market began to take hold.